Wednesday, 25 May 2016

Simon Jenkins: Why Brexit economic forecasts are specious

I have a good deal of time for the IFS and yes, I know how much EU funding they get. I'm not accusing them of corrupt practice or of distorting evidence. The fact is, one can find economic evidence that supports just about whatever hypothesis one can dream of. Sun-spots and the price of oranges? Done. Tie-width and hysteresis-driven efficiencies in the financial markets? Done. All IFS have done is take the Remainian assumptions from loads of other studies and apply them to a hypothetical scenario that probably only considers about 4% of the correlative factors it should do. Still, don't take my word for it - Simon Jenkins has it nailed in the Standard.

The Treasury has, for the duration of the referendum campaign,
switched from being a respected economic institution to being a lobbyist
for Project Fear. Its notorious apocalypse algorithm looked like a
schoolboy spoof, with its subscripts and squiggles “proving” Brexit
would cost every household £4,300. (Didn’t the Treasury once prove that
EU regulation cost households virtually the same?)

The Treasury thesis appears to be that the shock of Brexit would make
Londoners poorer, interest rates higher and deter immigrants and rich
foreigners from buying or renting houses in the capital. Prices would
therefore fall. That is certainly plausible. Whether this would be a
“shock” scenario for most Londoners is surely moot.

We are now entering a world in which economists simply seek
predictions to support prejudices. The Treasury assumes that Brexit
would lead to a fall in the pound. But surely that would make houses
cheaper for foreigners to buy and push at least some prices back up? Why
does Osborne not warn of a Brexit “soaring house price shock”?

In particular, he dismisses Osborne's claim that London house prices would fall by 20%

These imponderables are clearly too great for any sensible person — but
not apparently today’s highly politicised Treasury. The wisest remark
perhaps comes from Johnny Morris of the estate agent Countrywide, who
says simply: “Brexit would be an unprecedented turn of events, with a
wide range of possible outcomes.” That is economist-speak for “no one
has a clue”.

So, everyone from blokes in the saloon bar to social commentators have worked out that these economic forecasts are Drek. Let's admit we simply don't know what Brexit would bring - but we can cope with it. In any case, the argument for Brexit is not economic but moral; it is cowardly, unpatriotic and immoral to allow British sovereignty to be stolen by a cohort of profoundly anti-democratic and unelected EU officials. This is about Freedom, not geld.

A perusal of the Treasury's antics in the crash of 2008 where they did a complete 180 - the web site was almost entirely re-jigged to reflect sage prescience about the events whereas before it was house prices will go up for another 10 years boom, boom, blah, blah, blah.

Even Broon joined in removing his "no more boom and bust" speech from the Chancellors speech recordings.

"In any case, the argument for Brexit is not economic but moral; it is cowardly, unpatriotic and immoral to allow British sovereignty to be stolen by a cohort of profoundly anti-democratic and unelected EU officials"

"I'm not accusing them of corrupt practice or of distorting evidence. The fact is, one can find economic evidence that supports just about whatever hypothesis one can dream of. Sun-spots and the price of oranges? Done. Tie-width and hysteresis-driven efficiencies in the financial markets? Done. All IFS have done is take the Remainian assumptions from loads of other studies and apply them to a hypothetical scenario "

Does this sort of tactic remind you of anything? The first thing that popped up in my mind was the sort of scaremongering and manipulation that the global warming crowd uses to push their agenda.